Client demand prompted Rathbone fund launch

Financial returns and investing responsibly are not mutually exclusive, Rathbones’ David Harrison has said.

Mr Harrison, who is lead manager of the Rathbone Global Sustainability fund which launched in July this year, said Rathbones had seen "significant client demand for a sustainable equity strategy off the considerable success of the Rathbone Ethical Bond fund".

Speaking to Money Management’s Craig Rickman, he said: "What we’ve done is essentially taken the same sustainability framework from the [Rathbone] Ethical Bond fund, backed up by a tried and tested investment process that we use on a number of mandates and rolled that out to the new fund."

In a press release about the new fund, Rathbones stated its objective "is to provide a total return in excess of the FTSE World index, over the long term (a minimum of five years), from a portfolio of global equities which meet the fund’s sustainability criteria".

We would argue that a management team has to think about ESG and sustainability when they manage their business.

David Harrison

Asked how challenging it was to achieve returns on a par with traditional investments but which also adhere to social and environmental values, Mr Harrison explained: "We would actually argue that financial returns and acting responsibly are certainly not mutually exclusive.

"If anything, if you find a company that strongly adheres to ESG [environmental, social and governance] and sustainability, they’re strengthening their business model. We would say that would enhance the long-term returns of the business."

He continued: "If you have a company where the senior management buy in and they think about sustainability, essentially they’re strengthening the economic moat around their business, so making their franchise more sustainable. And probably avoiding some of those catastrophic reputational risks we’ve seen recently."

He highlighted the Volkswagen diesel emissions scandal as an example of a company that had suffered reputationally recently.

"We would argue that a management team has to think about ESG and sustainability when they manage their business," the manager added.

On a regional basis, Mr Harrison acknowledged the US was behind Europe "in terms of ESG and how they think about it" but that he was still finding companies there for his portfolio.

"At the same time, the US is home to some world leading businesses, so if we can find those businesses that are world leading franchises that are seizing and being proactive around ESG, that’s very interesting to us," he said.